By Barbi Reuter, Principal, PICOR Commercial Real Estate, a Cushman & Wakefield Alliance Member
May 8, 2009
Investment sales activity fell off the cliff in mid-2008 across the commercial sectors, including undeveloped land. Comparing first quarter 2009 sales activity to the same period in 2008, declines in all sectors are apparent:
Industrial: The number of transactions dropped 68%, dollar volume was down 87%, the average price per square foot (SF) sold declined 30%, and the average cap rate saw the largest increase of any sector bumping up to 9.2% from 7.0%.
Office: Only ten transactions closed in 2009 versus 21 in the same quarter of 2008, a 52% decline, while dollar volume decreased commensurate with industrial (down 87%) given the 4-building portfolio sale included in 2008. The average price per SF dropped 15%, and cap rates increased modestly from 6.8% to 7.2%.
Retail: While the number of transactions only dropped 34% for this asset class, dollar volume was off 46% with a more precipitous decline in the price per SF, decreasing nearly 54%, given the nature of the smaller properties sold. Cap rates have trended similar to office, increasing from 6.7% to 7.1%.
Multi-family: Six communities over 40 units closed in early 2008 at an average cap rate of 6.7% and $41,360 per unit. With only one sale in the first quarter of 2009 (a new construction community with large units), no meaningful comparisons can be made, except to comment on the current paucity of activity.